President Biden recently signed the American Rescue Plan Act of 2021 (ARPA) into law providing an additional round of relief to businesses and individuals. A key component of the law is the popular $1,400 economic stimulus payment to help those struggling with employment issues. As widely reported, the IRS issued 90 million stimulus payments within the last week and will issue more in the coming months. The ARPA also made the first $10,200 of unemployment benefits received in 2020 tax-free. This retroactive change to how unemployment benefits are taxed has made it almost impossible for the IRS to keep up. For this reason, on March 17, the IRS announced an extension of the April 15 filing deadline to May 17 for individual taxpayers. To help clients, prospects, and others, Clayton & McKervey has provided a summary of the key details below.
Key Extension Details
In the extension announcement, the IRS outlines the 30-day extension noting that it is automatic and individual taxpayers do not need to make a special election to qualify. Although formal guidance will be issued in the coming days, the extension also applies to any tax payments related to 2020, regardless of the amount, which would have otherwise been due. This means taxpayers will not incur penalties and interest if payment is made by the new May 17 deadline.
Estimated Tax Payments
The relief does not apply to estimated tax payments due on April 15, 2021. They are still due on the same date and there will be no waiver of penalties and interest for late payments.
Other Important Considerations
The IRS relief for victims of the February winter storms in Texas, Oklahoma, and Louisiana will not be impacted. These filers still have until June 15 to file and pay 2020 individual taxes. Additionally, keep in mind that the change in deadline only applies to individual filers; the extension does not impact other filers such as corporations or trusts, or entities with a fiscal year.
The extended filing deadline gives individuals more time to prepare or make updates to their tax returns. The state of Michigan recently extended the filing deadline for state income tax returns to May 17 as well. If you have questions about the information outlined above or need assistance with a tax or accounting issue, we can help. For additional information, call us at 248.208.8860 or contact us today. We look forward to speaking with you soon.